Insights

More Than One Way to Crack a Nut

Gone are the days of responding to any business to business dispute simply by sending a Writ off to court at the earliest opportunity and letting a court action run its course.

There is good reason for this:

The dispute can be with a supplier or customer with whom you want to retain a relationship: something which can be tricky if you are suing them in court!

Court actions can also be perceived as a long and expensive process. They will generally involve a considerable commitment of time and energy from a client’s senior management, taking them away from the day to day running of their business.

A court action is, in a sense, in the public domain. On occasion, court actions can attract unwanted press attention.

In response to these factors, alternative forms of dispute resolution have developed and should be considered, alongside the option of ordinary court proceedings.

In the first place, the courts themselves have sought to take onboard the business world’s concerns, introducing a Commercial Court with its own rules. This involves a case managed approach with a specialist commercial Judge or Sheriff being assigned to the case and then deciding on a procedure particular to that case and intended to secure its expeditious progress.

Away from the courts, there are other ways of tackling disputes, each of which has its advantages and disadvantages.

The construction industry, for instance, commonly uses the Adjudication process to try to produce swift decisions to allow building projects to continue apace and avoid costly delays.

Arbitration is another way to tackle conflicts in a private forum. Some commercial parties will look to include clauses in their contracts setting out that any dispute will be resolved by an arbitrator with specialist knowledge of the issues in their industry.

Whilst both Adjudication and Arbitration, similarly to court proceedings, are adversarial in nature another alternative is Commercial Mediation. It involves a third party mediator trying to facilitate an outcome which is acceptable to both parties rather than deciding one party is right and the other wrong in relation to disputed issues. That can make it less adversarial, gives the parties control over what they are prepared to agree to and allows scope for any outcome to deal with a whole range of matters beyond the scope of other forms of dispute resolution. However, Commercial Mediation requires parties who are willing to explore different options and possibilities and there is no guarantee that any outcome will be achieved.

In short, there are various ways in which commercial disputes can be tackled. Not every dispute is best dealt with by the one method. With an awareness of these different possibilities, there is an opportunity to set out in the contract itself how you wish to address any difficulties that arise.

Otherwise, it is about carefully assessing the nature of the dispute, what a particular business wants to achieve and then identifying the most appropriate dispute resolution process with that in mind.